College Student Loans – Bad for the Financial Health of College Graduates

When making the college decision, graduating high school students must focus more of their attention on how they will afford the cost of college education. The easy way is to take out student loans. But loans you take out today, you must pay back tomorrow. And when the time comes to “pay the piper,” the graduate meets the stark reality of monthly payments, poor career prospects and loan default.
Think of it this way. Suppose you graduate from college after advanced studies with an outstanding debt in excess of $100,000. At a very conservative 5% interest rate over a ten-year period you will need an annual salary of $128,000 to afford the monthly payment of over $1000 (10% of your gross monthly income).
Based on career prospects, your ability to get a professional level job upon graduation that will enable you to pay back your debt is not very good. If you decide to take out student loans today and you are unable to make monthly payments after you graduate the consequences to you will be severe.
The obvious consequences are oppressive:
– You cannot discharge these loans in bankruptcy. It is possible they will be with you for life.
– Your lenders will report your default to all major credit bureaus. You will then Difference Between Loan And Finance In Hindi find it difficult to acquire loans for automobiles, credit cards and a home.
– You will deal with collection agencies who can charge significant fees (up to 25%). These fees will increase the outstanding amount of your loans. Through court order, these same collection agencies can garnish your salary and prevent you from purchasing or selling assets. They can force you to surrender any tax refund you receive to pay down your loan.
– Some programs such as Public Service Loan Forgiveness allow you to discharge your loan before it matures. Default can make you ineligible for payment relief or loan forgiveness.
The less obvious consequences can even be more severe:
– You will find it difficult to start a comfortable life for you and your family. The stress and mental anguish that comes from dealing with lenders and collection agencies when you default is dreadful.
– You will watch helplessly as your outstanding balance that comes from arranging deferments, consolidation, and collection agency fees will grow to enormous proportions. Any time that you defer your loan payments means further cost to you and profits to the lenders and collection agencies.
– You will want to have your life back. You must settle Financial Strategy Books your student debts before this will happen.
My advice to all high school students who are planning to attend college is the following:
– Understand that in most cases the goal of a college education is financial security. Never ever lose your focus on that.
– Keep college expenses to a minimum. This includes tuition and other fees.
– Remember that the debt you incur today will be waiting for you when you graduate. Unfortunately, you may not secure the professional level job needed to pay your debt and start your life.
– Do your research. Be reasonably comfortable that the college you select and the degree you acquire will enable you to meet your goal of financial security.
I beg students to say no to student loans and allow themselves to start their lives after college with a clean slate. If you can focus on being debt-free upon graduation from college, you will be able to start your life and work toward financial security with no financial burdens. You will aim for this goal because you now realize that the “pot of gold” you thought was waiting for you may not lie immediately at the end of the college rainbow. You have to approach your education in a financially responsible fashion.

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